Obama aims for second term success

Barack Obama
made history by becoming the first black president of the United States. Now he is hoping to emulate the comeback kids,
Ronald Reagan
and
Bill Clinton
, and win a second term in 2012.

Reagan and Clinton between them suffered something resembling the horrendous first-term economic conditions and midterm election drubbings that Obama has endured– but they prevailed.

Obama will be attempting to emulate their re-election achievements in a climate of high unemployment, weak confidence and sluggish economic recovery. There’s also divisive debate about the direction of America’s ­economic, budget management and social policies, a war with Libya and increasing volatility across the ­Middle East.

At stake is the direction of the world’s largest economy and most influential foreign policy player.

Against this unpromising background, Obama and his team must recreate the excitement and vast ­network of grassroots supporters that propelled him to victory over John McCain in 2008 on a tidal wave of $US750 million in campaign ­donations.

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If they are successful, some experts believe 2012 could be the first $US1 billion campaign.

The video announcing Obama’s re-election bid does not feature its star attraction.

It Begins With Us features grassroots supporters from around the country explaining why they believe they need to get involved and not leave the President’s re-election to chance.

“Unfortunately, President Obama is one person . . . plus he’s got a job . . . We’re paying him to do a job, so we can’t just say, ‘Hey, could you just take some time and come and get us all energised?’ So we better figure it out," says “Alice", a black woman from Michigan.

Incumbency and a head start over his as yet undeclared Republican opponents are among the advantages Obama takes into the campaign, says John Pitney, Crocker professor of politics at Claremont Mckenna College in ­Califormia.

“The skeleton of his supporter base is in place. His supporters are veterans of the field. This will enable him to build his grassroots campaign, and they proved to be very important in 2008," says Pitney. “Grassroots don’t grow overnight."

Even so, experts all agree that the economy will be the No. 1 issue.

“The thing to remember about the presidential election first and foremost is that it’s a referendum on the incumbent," says Charlie Cook, publisher of The Cook Report.

“It’s not a choice between two people. It’s about the circumstances. People vote the economy, they vote their pocket books more than anything else, and foreign policy rarely ­intervenes."

Here the news for Obama is mixed, but the trend is positive enough to make him favourite to win re-election. Unemployment, stuck uncomfortably close to 10 per cent for much of his presidency, has dropped a full percentage point to 8.8 per cent in the past four months as private-sector job creation accelerated.

This is still too high, but if the trend continues and unemployment is closer to 8 per cent by polling day, Obama’s prospects will look ­better.

Cook points out that Reagan had to endure unemployment of 10.8 per cent in his first year in office, 1981, and the Republicans lost 26 House of Representatives seats to the Democrats in the 1982 midterm elections.

But by the time Reagan went to the polls in November 1984, the economy was booming again. The jobless rate had plunged to 7.4 per cent, the University of Michigan Consumer Sentiment Index had soared from 73.4 at the mid-terms to 96.3, and Reagan won a 49-state landslide.

“We’re not going to get anywhere near 7.4 per cent but if it fell down somewhere in the low 8s that’s a place where you are more likely to be re-elected," says Cook.

The question is whether the economy is going to surge back with anything like the vigour that propelled Reagan to his second term.

Not all economic indicators are travelling in the right direction for the President. The Michigan Consumer Sentiment Index, now published jointly with Thomson-Reuters, plunged 10 percentage points – the 10th largest monthly change to date – to 67.5 in March.

Consumer survey chief economist Richard Curtain said higher petrol and food prices had contributed to the drop, but “the more damaging cause . . . was that the fewest consumers in more than a half century expected income increases, and many fewer anticipated gains in their inflation-adjusted incomes."

The data did not foreshadow a renewed downturn, which would be disastrous for Obama’s prospects, but Curtain says continued job gains were essential as “even modest job losses could quickly shift consumers towards retrenchment".

The sharp drop may be reversed but even before that consumer sentiment was at levels at which – on average since 1956 – incumbent presidents had lost their bids for re-election.

The “mood of the country" reading – 63 per cent of Americans believe the country is on the “wrong track" – is much closer to levels where incumbent presidents lose rather than win re-election.

And Obama’s personal approval rating – 46.6 per cent approve, 47.4 per cent disapprove – is also closer to the “incumbent losers" average than the incumbent winners’ circle.

Such is the power of incumbency and confidence in economic forecasting, however, that the President enters the race as a solid favourite. It helps that Republican hopefuls look weak, and that no obvious leader has emerged from among them. Intrade, the predictive betting market, rated the President a 60 per cent chance to win re-election; the most fancied Republican hopeful is the undeclared former Massachusetts governor, Mitt Romney, with a 12.7 per cent chance, from former Minnesota governor Tim Pawlenty with 5 per cent, sitting Indiana governor Mitch Daniels and former Arkansas governor Mike Huckabee.

“I’d say he’s a pretty good bet, a two in three chance of winning re-election," said Tom Mann, senior fellow in governance studies at the Washington-based Brookings Institution.

The direction of the economy over the next 19 months is largely out of the President’s hands. He has more influence over budget policy, but this is the subject of ferocious partisanship debate, and his Republican opponents accuse him of ducking his duty.

Republican House budget committee chairman Paul Ryan was due to unleash “the first cannon blast of 2012" in Washington on Tuesday – a budget proposal to slash more than $US4 trillion from the $US9.5 trillion cumulative budget deficits expected to be run up over the next decade under Obama’s 2012 budget request.

Barely anyone disputes that the budget deficit – about $US1.5 trillion or about 10 per cent of gross domestic product this year – needs to be cut. But the course Ryan has chosen – cutting $US1 trillion from Medicaid (the federal health insurance scheme for the poor) principally by converting it to a system of capped grants to the states, and converting Medicare (the federal aged-care scheme) to a system of means-tested premium subsidies – has sparked a bitter debate.

Ryan says he is reforming these entitlements to “save them" from insolvency. “Nobody is saying that Medicare can stay on its current path," he told Fox News at the weekend. “We should not be measuring ourselves against some mythical future of Medicare that isn’t sustainable."

But the plan will struggle to win the approval of the Democrat-controlled Senate.

Critics say it would leave millions of people uncovered and defeat the goals of healthcare reform, and that major entitlement reform can’t happen in the President’s first term.

While budget experts fretted about debt and deficits, “most of the political analysts here just don’t see the makings here of any kind of agreement before the election", Brookings’ Tom Mann says.

What the Republicans’ budget proposal will do is frame the budget debate in their terms and on territory that is not comfortable for the President, who scores his lowest rating from voters polled by Gallup on handling of the ­federal budget.

Obama has made sure to withdraw the American pilots who spearheaded the military campaign in Libya from flying front-line missions as quickly as he can, in a bid to minimise fallout from the conflict and ensure no American casualties. There is no guarantee this will be successful, and there are signs of the rebels’ camp bogging down in the face of a counter-attack from Muammar
Gaddafi
’s forces.

Cook reckons voters will give Obama a pass on the stalemate so long as American lives aren’t lost. But he needs the wider Middle East to settle down to reduce petrol prices, which are hurting consumers.

“That neighbourhood settling down is very important to his re-election," Cook says.